Embracing the Real Living Wage makes real business sense
The Real Living Wage is the right thing to do for people and for business. What seems initially like pure cost goes on to pay dividends in terms of recruiting and keeping the right people. Inflexion’s ESG Director Jennie Galbraith invited the portfolio to hear from Graham Griffiths from the Living Wage Foundation on why businesses should embrace this.
Though it’s been going for over two decades, the Living Wage movement has gained a lot of momentum in the last few years in the UK. An increasing focus globally on ESG and its impact on attracting and retaining talent is putting fresh impetus for the need to treat and pay people fairly, and it’s clearly more than box-ticking. “The living wage has never been as relevant as it is today in the cost-of-living crisis and affordability challenges,” stresses Graham, adding that 1,100 firms have joined in 2023 already. “The narrative is clearly helping businesses to understand it’s the right thing to do to support their staff.”
It wasn’t always thus. The living wage movement dates back to November 2001 as families working in East London realised the minimum wage, launched just two years prior, was insufficient to truly get by. In 2011 the Living Wage Foundation was launched to formalise the movement, with Graham reporting that it’s lifted over 430,000 workers onto the real Living Wage as almost 13,000 accredited Living Wage Employers look after their staff and contractors.
Since its launch in 2011, the Living Wage Foundation has put over £2bn back into the pockets of low-paid workers in the UK.
In 2016, just over a quarter of the FTSE 100 were Living Wage employers; today the proportion has more than doubled to 53%, something Graham calls “a big progression”.
People matters matter
Despite this progress, there is still far to go, with 1 in 6 UK employees still earning below the living wage. Delving deeper into the stats reveals it’s largely an issue of gender and race, with nearly 1 in 5 women earning below the threshold and 19% of people from a racialised community earning less than the living wage, against 16% of white people.
Not only is it good for people, but it is also good for business, with 93% of living wage employers saying the accreditation has benefitted them:
- 60% of businesses report that becoming a living wage employer has improved recruitment of employees,
- 62% say it has improved relationships between staff and managers,
- 86% feel it’s improved the reputation of their business.
These are more than warm and fuzzy factors. Brewing giant Brewdog said in a case study “we believe there is a direct corelation between our growth and being a living wage employer” and cited stats that staff turnover on retail sites fell 40%, recruitment costs fell significantly, and they saw a 50% increase in staff satisfaction.
The future of the living wage
The success of the Living Wage movement has inspired plans for it to continue tackling in-work poverty in the future.
“It’s important to ensure that workers across global operations and throughout supply chains are paid a real Living Wage,” Graham says. He points to two areas the Foundation is looking at:
The Foundation launched the Living Pension standard in February 2023 to tackle pension poverty and targets a saving benchmark of £2,500, which would equate to 12% of a full-time employee's salary. This is a significant increase from the current statutory minimums, and employers can either use the percentage target or the cash target, especially for low-paid staff.
Recognising the problem of insecure hours for low-paid employees, the Foundation launched a Living Hours initiative in 2019. The standard stipulates decent notice periods for shifts of at least 4 weeks, a contract that accurately reflects the hours you regularly work, and a guaranteed minimum of 16 hours per week for those who want it. It has over 80 accreditations, and 50 of those have joined in the past year. The movement also has a global living wage project to bring together a network of accreditation bodies worldwide to ensure consistency in approach.
“These are complementary next steps for firms already paying the living wage. It’s about the journey of a Living Wage employer post accreditation to help firms see network membership not as an end goal but rather an ongoing journey for staff wellbeing,” Graham concludes.
Benefits of accreditation
The living wage accreditation helps organisations demonstrate their values to their staff and clients while fitting into other accreditation schemes. Sparta Global, a specialist technology training firm backed by Inflexion since 2020, went down the voluntary living wage path in order to improve the wellness and commitment of its employees. “Paying the real living wage has led to happier employees,” says Purnima Sen, Chief People & Compliance Officer at Sparta.
She goes on to explain that it is becoming increasingly important for attracting top talent, as future employees look for employers who offer learning and development opportunities, diversity, social impact, and better living conditions. “It’s not just good for business but rather a business imperative to look at the living wage,” she states.
Implementing the real living wage for all employees proved to be more onerous than initially anticipated as Sparta’s consultants work in different areas, but the firm persevered as it aligns with Sparta Global's values of excellence and reputation. Ultimately they changed the salaries of around 250 employees in London and over 100 in other areas of the UK after liaising directly with the Foundation on how best to approach an aspatial workforce. Sparta’s application approved in just a week at the start of 2023.
Purnima feels the living wage accreditation helped Sparta succeed with its B Corp certification earlier this year, as it provided third-party evidence that Sparta Global is committed to looking after its people by paying fair wages.
“It’s had a real impact and helped us to really stand out and be differentiated against our competitors,” she says, adding that it also helped with their Inclusive Employer Standard for the UN Global Compact.
Inflexion is an accredited Living Wage employer, meaning all its employees, including contracted staff and those providing on-premise services, are paid at least the living wage. A number of Inflexion’s portfolio companies are also Living Wage employers.